Perpetual futures, often called perps, are DerivativesDerivativesContracts whose value comes from another asset, such as shares, a currency or a cryptocurrency. that track the price of a crypto but never expire. You can take a long position, which gains if the price rises, or a short position, which gains if it falls. You never own the crypto itself, only the contract.
How do they work?
Traditional futures have an expiry date, and on that date the contract's price converges with the market price of the asset. Perpetual futures have no expiry. Instead, regular payments between buyers and sellers keep the contract's price close to the spot price. The payments are set by the funding rateFunding rateA rate that sets the regular payments between long and short positions in perpetual futures.. If the contract costs more than the crypto itself, those with long positions pay those with short positions, and the other way round.
Perps allow LeverageLeverageTrading with borrowed money, which multiplies both gains and losses and can wipe out your whole stake in a short time.. You put up margin and take a position many times larger than the margin. On Hyperliquid, for example, leverage can go up to 40x for some cryptocurrencies.
What are the risks?
With high leverage, a small price move can wipe out your margin. At 20x leverage, a 5% move in the wrong direction is enough, and in practice LiquidationLiquidationWhen a loan or leveraged position is closed automatically because the collateral or margin no longer covers the debt. comes even sooner. The regular payments can also add up if a position stays open for a long time.
In the EEA, these contracts count as financial instruments under MiFID II, not as crypto-assets under MiCA.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.